Wednesday, March 07, 2012

Gold Price Gained Today as did the Silver Price Pushing back Yesterday's Losses

Gold Price Close Today : 1683.30
Change : 11.90 or 0.71%

Silver Price Close Today : 3354.30
Change : 80.2 cents or 2.45%

Gold Silver Ratio Today : 50.183
Change : -0.866 or -1.70%

Silver Gold Ratio Today : 0.01993
Change : 0.000338 or 1.73%

Platinum Price Close Today : 1634.25
Change : 23.85 or 1.48%

Palladium Price Close Today : 688.50
Change : 18.50 or 2.76%

S&P 500 : 1,352.63
Change : 9.27 or 0.69%

Dow In GOLD$ : $157.65
Change : $ (0.14) or -0.09%

Dow in GOLD oz : 7.626
Change : -0.007 or -0.09%

Dow in SILVER oz : 382.71
Change : -6.99 or -1.79%

Dow Industrial : 12,837.33
Change : 78.18 or 0.61%

US Dollar Index : 79.74
Change : -0.123 or -0.15%

GOLD PRICE gained today, as did the silver price, pushing back against yesterday's losses. Silver snatched back 80.2c (2.4%) to close Comex at 3354.3. Gold clawed back $11.90 (0.7%) to $1,683.30.

But in these circumstances, we have to ask one question: did the price climb back over that place where it broke down? That would have been about $1,696. High today reached only $1,686.50, so gold came nowhere near that breakdown point.

That throws us back on another proverb: A trend in force stays in force until broken. The downtrend wasn't broken, so it reigneth yet undiminished. And the flag or pennant gold broke down from yesterday points to a $1,600-ish target.

Yesterday the GOLD PRICE violated its 200 day moving average ($1,674.88), but climbed over that today. Without pulling away from that 200 DMA immediately, this is merely the difficulty of pushing through a crowded door, and 'twill fall further.

Of course, no guarantee says that GOLD PRICE won't catch at $1,650 and turn around, but that's like drawing a card in five card poker when you're holding the Ace, King, Jack, and 10 of diamonds. Odds are not good you'll complete that inside straight.

I'm not bearish, I'm just waiting for the best place to grab hold. Asked about his rule for successful combat, Napoleon responded something like, "You grab hold and see what happens." But you have to wait for that right place and moment to grab hold. That was the difference between Napoleon and Mussolini or John Pope or Ambrose Burnside.

Y'all can take what I said about gold and merely change the numbers. Silver came plumb up to the bottom of the range where it broke down, 3350 - 3560c (actual high was 3354.5c), gained 80.2c (2.4%) and closed at 3354.3c. Yet this satisfieth not the rule, that it close HIGHER than the breakdown point.

The SILVER PRICE has established new support about 3250c. Some lateral support also lurks around there, but not much. The nearness of that 50% correction point at 3183c begs to be kissed by a drop to that level. Much greater lateral support awaits at 3025c. Bear in mind, however, silver's perennially greater volatility. It has not yet closed below its 50 DMA (3233c), but stands below the 300 DMA and 200 DMA (practically the same right now at 3487 and 3492), and below its 20 DMA (3432c). Not one of these witnesses argues for higher prices immediately.

Corrections come -- you just wait them out. That's the point of riding the primary trend (bull market). Sooner or later it will bail out even your worst timing mistakes, and that waiting is easier than timing, I guarantee.

The folks from the Fayette County Tea Party put up a video of my speech there on 24 February. It's at Pour a cup of coffee or pop a beer, it's 45 minutes.

Today was a bounce back day for most markets, not really gainsaying yesterday's losses. They bounced, the way a dead cat bounces. 'Tain't a sign of life, it's just physics.

The US dollar index elbowed its way to 80 (79.90) then backed off. As long as it doesn't close below 79.60 -79.50, it is merely gathering its strength to punch through 80 resistance on its way to challenge 82.

Yesterday the dollar index rose through its 50 day moving average (79.65) adding to its upward momentum. It slacked off today 0.16% (12.3 basis points) to 79.743. Look for the dollar to rise further. It would have to close below 78.10 to gainsay that outlook.

In the past 4 days the euro has gapped down twice. Gaps are panic markers, whether up or down, indicating more people trying to get through the door than possible. In this case, they were running out of the euro, and the gap reveals that there were no buyers until prices dropped through the air. Today the euro gained 0.25% to 1.3147, but who knows why. The off-again/on-again Greek Debt Deal, which somehow always eludes actually getting clinched, may now be on again. Creditors have until tomorrow to sign on for their haircuts, but unless two-thirds agree, it's no deal. Air is full of blather from Greek officials, but some big bondholders are thinking they'd be better off holding out and making the Credit Default Swap insurers pay off as a default. Ironically enough, this deal will not end the Greek crisis, only push it down the counter until the next crisis.

Japanese yen lost 0.36% today to 123.22c/Y100 (Y81.15/US$1). Down but meaningless, since two days ago it left an island reversal on a spike down, so will climb from here.

The Dow rose 78.18 points (0,61%) to 12,837.33 while the S&P500 gained 9.27 (0.69%) to 1,352.63. Happy days are here again, right?

Not quite. Look at the five day chart and you'll see today's action did nothing at all to make good the damage from yesterday's fall. All it accomplished was to establish new resistance firmly at 12,850. Gravity has taken over stocks, and gravity knows no mercy.

Argentum et aurum comparenda sunt -- -- Gold and silver must be bought.

- Franklin Sanders, The Moneychanger

© 2012, The Moneychanger. May not be republished in any form, including electronically, without our express permission.

To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold; US$ or US$-denominated assets, primary trend down; real estate bubble has burst, primary trend down.

WARNING AND DISCLAIMER. Be advised and warned:

Do NOT use these commentaries to trade futures contracts. I don't intend them for that or write them with that short term trading outlook. I write them for long-term investors in physical metals. Take them as entertainment, but not as a timing service for futures.

NOR do I recommend investing in gold or silver Exchange Trade Funds (ETFs). Those are NOT physical metal and I fear one day one or another may go up in smoke. Unless you can breathe smoke, stay away. Call me paranoid, but the surviving rabbit is wary of traps.

NOR do I recommend trading futures options or other leveraged paper gold and silver products. These are not for the inexperienced.

NOR do I recommend buying gold and silver on margin or with debt.

What DO I recommend? Physical gold and silver coins and bars in your own hands.

One final warning: NEVER insert a 747 Jumbo Jet up your nose.